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Enron Mail |
Political suicide - No farewell to arms - Bombed in Saudi - Divided over Kashmir - Conduct unbecoming - Loan agreement? - Corruption rules - German fall-out - Low-flying - Out of office
The Economist, 08/18/01 Enron Goes Overboard The New York Times, 08/17/01 IN BRIEF / ENERGY Enron Chief Seeks to Reassure Employees Los Angeles Times, 08/17/01 5 Studios Plan Joint Venture to Offer Movie Downloads Entertainment: The fee-based Net service for computers and TVs could begin as early as this year. Los Angeles Times, 08/17/01 Ciena, Brocade and Sonus Decline On Profit Woes, but Others Hang In The Wall Street Journal, 08/17/01 India To Begin Conciliation Talks With Enron Unit Sat Dow Jones Energy Service, 08/17/01 India Cabinet Oks Power Bill; To Seek Parliament Nod Dow Jones International News, 08/17/01 WORLD STOCK MARKETS - Big caps help Wall Street's late fightback. Financial Times, 08/17/01 Snags still slowing electricity pilot Houston Chronicle, 08/17/01 Socially unconscious funds CBS MarketWatch.com, 08/17/01 Political suicide - No farewell to arms - Bombed in Saudi - Divided over Kashmir - Conduct unbecoming - Loan agreement? - Corruption rules - German fall-out - Low-flying - Out of office 08/18/2001 The Economist Copyright (C) 2001 The Economist; Source: World Reporter (TM) - FT McCarthy Israel's main retaliation against an onslaught of suicide bombs was political: it closed Orient House, the Palestinians' de facto headquarters in East Jerusalem. It also briefly sent tanks into Jenin, threatened Beit Jalla and assassinated a Fatah fighter. In Macedonia political parties of the rival ethnic groups signed a NATO-inspired peace accord that promises ethnic Albanians something closer to equality in the state. Ethnic-Albanian rebels promised to hand over their weapons, to be collected, under the deal, by a NATO force. NATO decided to send an advance group of 400 soldiers even though its conditions for sending the full force - including a durable ceasefire - had not yet been met. Japan's prime minister, Junichiro Koizumi, angered China and other countries it fought in the second world war by visiting the Yasukuni shrine for the war dead, including some condemned as war criminals. The Bank of Japan took surprise measures to give the faltering economy a much- needed boost by easing monetary policy. The move met with approval: the Nikkei 225 index flew up by nearly 4% in a day. Revised figures showed that Japan's GDP rose slightly in the first quarter of the year instead of falling. The euro hit a five-month high, rising above 90 cents against the dollar. The IMF gave a warning that America's current-account deficit was unsustainable and that the dollar was likely to weaken further. The dollar also slid against the yen. America's economy suffered. Industrial production fell for the tenth month in a row to end 3.2% down in the year to July. Germany's economy is also in trouble. The Bundesbank estimated that GDP was flat in the second quarter. The British government suspended political institutions in Northern Ireland, after Unionists there refused to accept the IRA's talk of a "scheme" - no details, no date - for weapons-decommissioning as a substitute for action. The IRA promptly withdrew its scheme. Three suspected members of the IRA were arrested in Bogota. Colombian army chiefs said that they had been giving bomb-making courses to the FARC guerrillas. While Spain's central and Basque-region politicians swapped insults over the regional police force's willingness to fight ETA terrorists, ETA supporters publicly commemorated four of them blown up by their own bomb a year ago. In Turkey, one of the country's most popular politicians, Tayyib Erdogan, a former mayor of Istanbul, set up a new Islamic party. Meanwhile, civilians are openly questioning the political role of the armed forces, determined enemies of religious influence in politics. On Saudi Arabian television, three more Britons confessed to carrying out bomb attacks. The incidents are all thought to be connected with the illegal trade in alcohol. For his second term, Iran's president, Muhammad Khatami, disappointed reformists by largely reappointing his old cabinet of moderate loyalists. American and British aircraft twice attacked anti-aircraft sites in southern Iraq. Syria's prime minister paid a ground-breaking three-day visit to Baghdad. The Indian prime minister, Atal Behari Vajpayee, marked independence day by blaming Pakistan for wrecking relations between the two countries and "believing it can gain Kashmir through terrorism". Pakistan's President Pervez Musharraf promised a general election for October 2002, but it looked likely that the country would stay under military control. China suspended Seeking Truth, a leftist magazine that attacked a decision to allow capitalists to join the Communist Party. Congressman Gary Condit rejected calls for his resignation by two Californian newspapers over his "abhorrent" conduct in the case of a missing intern, Chandra Levy. State governments expressed concern that federal legislation on patients' rights would offer less protection to consumers than state laws already in place. A Justice Department report on the Los Alamos spy inquiry said that the FBI's investigation was deeply flawed from the beginning, had looked into the wrong crime and had ignored some possible suspects. A United States federal judge ruled that controversial snapshots of Barbie, an iconic plastic doll, were protected by the photographer's free-speech rights. Mattel, which makes the dolls, plans to appeal. After several days of talks, officials from Argentina were reportedly close to an agreement with the IMF over a new loan aimed at calming continued fears of a debt default or devaluation. Meanwhile, Brazil slipped towards recession. Its economy shrank by nearly 1% in the second quarter compared with the first. Cuba's Fidel Castro watched as Presidents Fernando Henrique Cardoso of Brazil and Hugo Chavez of Venezuela inaugurated a 680km (425-mile) electricity-transmission line linking their two countries. Kenya's parliament threw out an anti-corruption bill despite a first-time visit from the president, Daniel arap Moi, to encourage it through. Rejecting the bill puts in doubt millions of dollars in aid. Opponents argued that the bill was not tough enough. As the situation in Zimbabwe worsened, the Southern Africa Development Community took away the chairmanship of its defence committee from Robert Mugabe and said they were worried about the "spillover effect" of the troubles there. Attacks continued on around 100 white-owned farms. Four journalists from the main independent newspaper were arrested but released by a court. A triumph for family values: under pressure from the pope himself, Archbishop Emmanuel Milingo, from Zambia, agreed in Rome to abandon his South Korean wife, married in a Moonie ceremony in May, and "return to the church". I'm pregnant, he's been drugged, said she. The relationship between Deutsche Bank and Deutsche Telekom became frosty after the bank disposed of shares in the telecoms giant worth around euro1 billion ($880m) on behalf of an unnamed seller. Coincidentally, Deutsche Bank issued a research report, which recommended purchasing Deutsche Telekom shares around the time of the sale. Morgan Grenfell's name looked likely to disappear after 163 years in investment banking. Deutsche Bank, which acquired Morgan Grenfell some 12 years ago, intends to fold Morgan Grenfell Private Equity into its own private equity division, DB Capital Partners. Bayer, a German drug company, said that it was considering a co-operative venture for its drug business with a larger pharmaceutical company; a sell-off could follow. It had previously announced the withdrawal of an anti-cholesterol treatment. That will wipe up to $650m ($590m) off full-year profit and result in the loss of 5,000 jobs. Profits fell at UBS by 26% in the latest quarter compared with a year ago. Shares in Switzerland's biggest bank rose; profits had been expected to fall further. Citigroup, the world's biggest financial conglomerate, said that it would cut 3,500 jobs over the coming year to bolster slowing profits. The IMF and the World Bank decided to shorten to two days September's annual meeting in Washington, DC, fearing a repeat of the violence witnessed at a recent G8 summit in Genoa. Anti-globalisation protesters claimed a victory in the fight against global capitalism but said that they would turn up and protest anyway. US Airways became the latest airline to reveal that it was suffering from the economic downturn and the decline in business travel. It issued a profit warning, saying that losses for the next quarter will exceed $160m. Blue-chip companies were glum on both sides of the Atlantic. Continued huge losses and an ever-dwindling share price persuaded Mark Schneider to quit as chairman and chief executive of UPC, a Dutch cable firm. Enron, the world's largest energy trader, lost its president and chief executive, Jeffrey Skilling. He quit the American power giant for personal reasons after just six months in the job. Some executives who were "let go" recently had cause for celebration. Michael Bonsignore, former chief executive at Honeywell International, will receive $9m as a separation payment, as well as a variety of perks including executive travel (but not use of the office jet). Lucent Technologies, a struggling telecoms-equipment company, agreed to pay Richard McGinn, its former chairman and chief executive, a package worth $13m for barely three years' service. Deborah Hopkins, a former chief financial officer, will get near $5m. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Editorial Desk; Section A Reckonings Enron Goes Overboard By PAUL KRUGMAN 08/17/2001 The New York Times Page 19, Column 6 c. 2001 New York Times Company Whom the gods would destroy, they first put on the cover of Business Week. When the Feb. 12 issue featured a cover photo of Jeffrey Skilling, you knew bad things were about to happen both to Enron and to its new C.E.O. Sure enough, on Tuesday Mr. Skilling resigned for ''personal reasons.'' The next day he conceded that the most important of those personal reasons was the 50 percent drop in Enron's stock since January. Is this just another tale of extravagant expectations disappointed, the kind of story that has become all too common lately? No; this case has wider significance. Enron, based in Houston, is in the vanguard of a powerful movement that hopes to ''financialize'' (Enron's term) just about everything -- that is, trade almost everything as if it were stock options. That movement is as much about politics as it is about business, and the company has not been shy about using its political connections to advance its cause. With the arrival of George W. Bush in the White House -- thanks largely to Enron, a prime mover behind his campaign --the sky seemed to be the limit. But financialization looks more and more like a movement that has overreached itself. Enron was originally a natural gas pipeline company, swaddled like all such companies in a tight regulatory straitjacket. In the mid-1980's, however, gas markets were set free. And Kenneth Lay, who was C.E.O. at the time and is returning to succeed Mr. Skilling, saw a great opportunity. He transformed Enron from a company that delivered B.T.U.'s to one that dealt in contracts; as Business Week put it, the company became ''more akin to Goldman Sachs than to Consolidated Edison.'' Enron became the lead market-maker for the new, deregulated natural gas industry; since deregulation worked well for natural gas, which increasingly became the nation's fuel of choice, Enron's new role was highly profitable. After gas, electricity. As power deregulation became the rage across the U.S., Enron took on a key role as a broker for wholesale electricity. Soon the company was looking for new worlds to conquer: water supply, bandwidth on fiber-optic cables, data storage, even advertising space. Then things started to go wrong. Enron abandoned its venture into water supply when it became clear that governments were reluctant to entrust so crucial a matter to the magic of the invisible hand. And skeptics found ample justification for their lack of faith when electricity deregulation, which was supposed to be a certified success story, went spectacularly astray in California. True believers insist that the power crisis of 2000-2001, which transferred tens of billions of dollars from taxpayers to electricity-generating companies -- and quite a bit to Enron too -- was not a verdict on deregulation, that it was all the fault of meddling politicians who didn't let the market work. But this claim isn't particularly convincing, mainly because it isn't true. The real lesson of the California catastrophe was that the concerns that led to regulation in the first place -- monopoly power and the threat of market manipulation -- are still real issues today. State and local governments, alerted by what happened in California, will henceforth be a lot more wary about deregulation. There's even a movement to reregulate electricity markets. And that means fewer opportunities for Enron, whose stock price depends on the expectation that it will keep finding new Californias to conquer. Of course, the people Enron put in the White House are still there, and they seem to have learned nothing from California. It's true that the Bush administration sometimes compromises on its free-market principles -- it believes, for example, that energy producers need huge subsidies, even though the shortages those subsidies were supposed to correct have turned out to be imaginary (a recent cover story in Barron's warned of ''the coming energy glut''). But otherwise the administration's faith in absolutely unregulated markets is unshaken. The new head of the Federal Energy Regulatory Commission -- the watchdog agency that conspicuously refused to do its job in California -- is, you guessed it, a Texan with close ties to the energy industry. And the administration continues to believe that ''financialization'' is the way to go on just about everything, from school vouchers to Social Security. But it's wrong. And let's hope that it doesn't take a string of catastrophes to teach us that there are limits to what markets can do. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Business; Financial Desk IN BRIEF / ENERGY Enron Chief Seeks to Reassure Employees Reuters 08/17/2001 Los Angeles Times Home Edition C-2 Copyright 2001 / The Times Mirror Company The chairman of Enron Corp. sought to reassure employees Thursday that the energy giant's business is on firm footing as its stock faced a second day of brutal pressure on Wall Street following a top executive's surprise resignation. Kenneth L. Lay told employees at a companywide meeting that Enron's business is strong, despite the extended pressure on its stock and heir apparent Jeffrey K. Skilling's unexpected resignation as chief executive and president. "We've got a lot of great stuff going on and we're not getting much credit for it in the marketplace, but we will," Lay said. His comments came as Enron's stock saw its worst day in 19 months, closing down $3.40, or 8.5%, at $36.85 on the New York Stock Exchange. That brings its losses to about 13% since Skilling announced his resignation after the market's close Tuesday. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Financial Desk 5 Studios Plan Joint Venture to Offer Movie Downloads Entertainment: The fee-based Net service for computers and TVs could begin as early as this year. KAREN KAPLAN; CORIE BROWN TIMES STAFF WRITERS 08/17/2001 Los Angeles Times Home Edition A-1 Copyright 2001 / The Times Mirror Company Five major Hollywood studios said Thursday they are joining forces to build an Internet service that will allow consumers to download full-length movies to watch on their home computers and televisions beginning as early as this year. The studios--Sony Pictures Entertainment, Metro-Goldwyn-Mayer, Paramount Pictures, Universal Studios and Warner Bros.--believe that the pay service is the best way to combat the proliferation of bootleg feature films. Their as-yet-unnamed venture marks a radically different strategy from the one adopted by music companies. Record labels watched helplessly as millions of computer users employed Napster and other song-swapping services to download pirated copies of songs for free. Many observers believe that the record labels could have put a serious dent in services like Napster by offering consumers a legitimate way to obtain music on the Net. That is the strategy the studios are now embracing. "We feel we needed to offer a legal, high-quality, user-friendly alternative to what is currently out there on the Internet today," said Kevin Tsujihara, executive vice president of new media and strategic planning at Warner Bros. "By getting out in front of this, we were going to hopefully prevent some of the issues confronting the music industry." Initially, the studios will make 100 of their movies available to those with a personal computer and a high-speed broadband Internet connection. Each feature-length film will take 20 to 40 minutes to download, depending on the speed of a customer's broadband connection, how far away the customer is from a network hub and how crowded the network is at the time. The movies will boast better picture quality than videotape but will be less sharp than DVDs. "It's not view on demand, but it's as easy as getting in a car and driving to the local video store," said Yair Landau, president of Sony Pictures Digital Entertainment. Each studio will control when its movies become available for downloading, which titles will be on the service and how much each movie will cost. Sony, for example, plans to price its movies between $4 and $5 and offer them at the same time that they can be ordered through cable television pay-per-view services. Each studio will own 20% of the venture. The new service will use technology developed largely by Sony to enable customers to download movies over digital subscriber lines and cable modems. The technology incorporates special digital rights management software designed to combat the rampant piracy that has plagued the music industry. There are a few cable and Internet-based video-on-demand services in operation, but they lack a steady supply of current movies and television shows, and they have not attracted large audiences. Conspicuously absent from the venture are Twentieth Century Fox and Walt Disney Co., which are developing a rival system called Movies.com. Disney officials would not comment on why the company did not join the five studios. The Burbank-based entertainment giant is expected to announce a separate video-on-demand venture in the coming weeks. Initially, consumers will have to use their PCs to tap into the service. Some of the studios involved in the venture insist there is a segment of the movie-watching public--most notably college students--that will stare at a computer monitor for their entertainment. But analysts said the appeal of PC movies was limited. "I don't see a lot of people watching movies on their PCs unless they're on an airplane," said Rob Enderle, an analyst with Giga Information Group in Santa Clara, Calif. Consumers can watch their downloaded movies on television by connecting their PCs and TVs with a simple S-video cable or a radio frequency device connection, which is standard on many computers. Ultimately, couch potatoes will be able to download the movies directly to their digital cable set-top boxes and watch them on television without the need for special hookups. In fact, the movies will be able to drop directly into any digital device connected to the Internet, including many types of Net appliances that are still being developed, Landau said. It was the realization that today's technology could be extended to set-top boxes and satellite delivery systems that spurred the negotiations between the studios, Landau said. That broadened the nature of the talks into a forum for creating an industrywide standard for providing digital video on demand. Anticipating federal regulatory concerns, the studios contacted the Justice Department "as a matter of courtesy," said a studio spokesman, noting that other entertainment companies can join the venture. In addition, each of the studios is free to pursue other video-on-demand opportunities. Having a single standard will speed customer acceptance of digital movie distribution, said David Bishop, president of MGM Home Entertainment Group in Santa Monica. "If MGM opened its own video store and Paramount opened its own video store, it would be very difficult for the consumer to shop," he said. "Here they're able to go to one Web site and find a critical mass of content that is much more compelling than any one studio launching." Standards also will ease the work of broadband providers such as EarthLink Network, an Atlanta-based Internet service provider that discussed the venture with the studios. "This will certainly make it easier for a company like us to come in and hopefully negotiate with one entity as opposed to having [to maintain] a different set of technology requirements for each studio," EarthLink President Mike McQuary said. The new service could cannibalize video rentals and sales at chains such as Blockbuster Video, which account for almost half of movie-company revenues. Although the exact timing varies from studio to studio, videos and DVDs generally are available for sale and rental six months after the theatrical release of a movie. Those movies are available to pay-per-view services two months later. Earlier this year, Blockbuster dismantled a video-on-demand service it was testing with energy giant Enron Corp. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Abreast of the Market Ciena, Brocade and Sonus Decline On Profit Woes, but Others Hang In By Robert O'Brien Dow Jones Newswires 08/17/2001 The Wall Street Journal C2 (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -- Another brace of discouraging profit statements from technology-gear makers threatened to sink stocks again, but fears subsided as investors realized they had heard that tune before, letting market averages rally by the close. The impact on individual issues proved harrowing enough. Telecommunications-equipment maker Ciena hurtled to a 52-week low, declining $8.50, or 30%, to $19.62 in Nasdaq Stock Market trading. A total of 94 million Ciena shares changed hands, compared with a daily average of about 18 million shares. The declines came after the optical-systems concern warned that its earnings for the final quarter of its fiscal year, as well as for fiscal 2002, wouldn't be nearly as robust as analysts have been thinking. A number of other optical-systems makers joined Ciena in the downturn. ONI Systems shed 1.56, or 8.4%, to 17.02, Sonus Networks fell 2.16, or 13%, to 14.95, and Juniper Networks retreated 2.05, or 9.3%, to 20.02, all in Nasdaq trading. Compounding the misery in high technology, data-storage software maker Brocade Communications served up a downbeat outlook to accompany its quarterly results, which came out late Wednesday. Brocade slumped 2.38, or 7.8%, to 27.96 on Nasdaq. Other storage names, such as McData Class B declined 2.71, or 17%, to 12.91 on Nasdaq, hitting a 52-week low. Unlike previous sessions, when discouraging profit chatter proved the undoing of the technology sector, the latest warnings weren't fatal. The Nasdaq Composite Index finished the day ahead 11.43 points, or 0.6%, at 1930.32. "You might have expected today's casualties, Ciena and Brocade, to drag down the whole market," Jefferies Chief Market Analyst Arthur Hogan said. "But I think investors realized they weren't that surprised to hear of weakness in the technology sector, and the economic data we saw weren't as bad as they were expecting." The Dow Jones Industrial Average rose 46.57 points, or 0.45%, to 10392.52. Housing-starts data that were stronger than economists anticipated spurred gains for home builders. Pulte Homes rose 1.04, to 36.15. Centex gained 1.22, to 42.85. Lennar added 2.15, or 5.6%, to 40.66. Restaurant stocks moved higher amid continuing hope that consumer spending ignores the weakness that has beset the manufacturing economy. McDonald's gained 1.21, to 29.70. Krispy Kreme Doughnuts rose 2.22, or 7.7%, to 31.19. Outback Steakhouse gained 77 cents, to 28.95. Manufacturers gained after the release of a look at regional-manufacturing activity. United Technologies rose 2.76, to 73.60. Northrop Grumman gained 1.44, to 79.99. General Dynamics rose 1.39, to 83.24. The gains came after a report from the Federal Reserve Bank of Philadelphia showed that manufacturing activity in its region declined more dramatically than expected in August, but also said expectations for a recovery remain very strong. SmartForce (Nasdaq) fell 1.80, to 35.20. A technology trade journal reported the Redwood City, Calif., online-learning concern lost a contract to provide electronic-learning services to McDonald's to a rival, closely held Knowledgenet.com. Maximus fell 1.38, to 45.36, even though Dain Rauscher Wessels made upbeat comments about the outlook for the McLean, Va., provider of consulting services to government agencies. Sprint gained 48 cents, to 23.23, helped by encouraging comments from Thomas Weisel Partners about the provider of local-phone service. Instinet rose 72 cents, or 6.3%, to 12.07, despite pessimistic comments from Merrill Lynch, which cut earnings projections for the New York electronic-brokerage concern. The stock has traded at a 52-week low during the past week. Comverse Technology (Nasdaq) gained 2.76, or 10%, to 29.51. Goldman Sachs boosted its rating on the Woodbury, N.Y., telecommunications-systems company. Crown Castle fell 55 cents, or 6.3%, to 8.20. The Houston antenna-space leasing concern named John P. Kelly, its president and chief operating officer, chief executive, succeeding Ted B. Miller, who remains chairman. Agilent Technologies eased 35 cents, to 27.50. Goldman Sachs, in a preview of the Palo Alto, Calif., semiconductor concern's earnings release due Monday, said it expected the company to reduce its forecast for the fiscal fourth quarter. SouthTrust gained 53 cents to 26.38. Keefe Bruyette & Woods added the Birmingham, Ala., bank to its KBW/Philadelphia Stock Exchange Bank Index. Hormel dropped 1.18, to 24.87. The Austin, Minn., food producer posted fiscal third-quarter earnings that fell short of analysts' projections. Ryder System gained 1.20, or 6%, to 21.10. Morgan Stanley boosted its rating on the Miami transportation company, citing the success of management's cost-cutting initiatives. Enron, which fell to a 52-week low Wednesday as investors reacted to the announcement the Houston gas-pipeline operator and energy trader's chief executive unexpectedly resigned, declined again, falling 3.40, or 8.4%, to 36.85. Estee Lauder gained 1.09, to 39.85. The New York beauty-products maker posted fiscal fourth-quarter results that lived up to Wall Street's projections. Charles Schwab fell 50 cents, to 12.87, sinking to a 52-week low. The San Francisco discount-brokerage house has explored the possibility of purchasing the securities concern Jefferies Group, according to yesterday's Wall Street Journal. Jefferies gained 62 cents, to 36.65, reaching a 52-week high. Several multinational consumer-products companies made progress during the session, as investors responded to recent weakness in the value of the U.S. currency. Procter & Gamble gained 2.01, to 74.19. Colgate-Palmolive rose 98 cents, to 55.36. Kimberly-Clark gained 1.17, to 62.11. On the New York Stock Exchange, there were 1,689 issues advancing and 1,389 declining. NYSE volume totaled 1,060,367,770 shares, compared with 1,061,487,720 Wednesday. The average price per share rose two cents. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. India To Begin Conciliation Talks With Enron Unit Sat 08/17/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India's government will begin Saturday the first round of conciliation talks with U.S. energy major Enron Corp.'s (ENE) Indian subsidiary Dabhol Power Co., the Press Trust of India news agency reported Friday. The talks are aimed at resolving all outstanding issues between the government and DPC which resulted in the stoppage of power generation May 29 at the $2.9 billion 740 megawatt Dabhol project in the western Indian state of Maharashtra, PTI said. As reported, DPC gave a conciliation and an arbitration notice to the federal government April 4 for not honoring counter-guarantees over non-payment of electricity bills by Maharashtra State Electricity Board for December 2000 and January. India has appointed retired Supreme Court Judge B.P. Jeevan Reddy as its conciliator, while DPC has appointed former Chief Justice of New South Wales Lawrence Street as its representative on the three-member panel. Former New Zealand High Court Judge David A.R. Williams is the third conciliator, jointly chosen by both parties. Dabhol is India's single largest foreign investment to date. -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com -0- 17/08/01 10-55G Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. India Cabinet Oks Power Bill; To Seek Parliament Nod 08/17/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI (Dow Jones) India's Cabinet Thursday approved the Electricity Bill 2001, which seeks to change the country's outdated power laws and restructure loss-making state electricity boards, government spokeswoman N.J. Krishna said Friday. The comprehensive legislation seeks to replace the existing Indian Electricity Act of 1910, the Electricity Supply Act of 1948 and the Electricity Regulatory Commissions Act of 1998. Krishna said the Business Advisory Committee of parliament will decide when to introduce the bill. The current parliament session ends Aug. 31. The current draft calls for restructuring the state electricity boards by pulling transmission services out as an independent activity. States could retain generation and distribution activities or they could privatize them as well. The legislation is deemed positive for producers and consumers, said Vishvjeet Kanwarpal, a New Delhi-based energy consultant with the Asia Consulting Group, as the bill calls for the creation of state-level regulatory electricity commissions. Such commissions will function as "independent bodies to regulate the rate of tariffs and basically create a level playing field for IPPs (Independent Power Producers) and consumers," said Kanwarpal. Tariff rates have proved to be a sore point in power purchase agreements in India, most visibly with the Enron Corp. (ENE) sponsored Dabhol Power Company in Maharashtra. The DPC plant was shut May 29 after its sole buyer, the Maharashtra State Electricity Board, stopped drawing power because of what it called "unaffordable tariffs of DPC." Kanwarpal said if state electricity boards want to raise tariffs, this would be conditional on the boards increasing efficiencies laid down by the regulators. "It's a carrot and stick approach to increase greater efficiency," he said. Regulators will also work to prevent widespread power theft - the bane of India's power sector which comprise a significant proportion of transmission and distribution losses. The legislation, if passed, could also open up power trading between deficit and surplus regions to the private sector. Currently, such power trading is restricted to state-owned Power Trading Corp. -By Sonal Singh; Dow Jones Newswires; 91-11-4619426; Sonal.Singh@Dowjones.com (with contributions by Sri Jegarajah in Singapore) -0- 17/08/01 09-17G Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. WORLD STOCK MARKETS - Big caps help Wall Street's late fightback. By MARY CHUNG. 08/17/2001 Financial Times © 2001 Financial Times Limited . All Rights Reserved US stocks battled back from earlier losses as big caps provided a lift to the struggling indices. The Dow Jones Industrial Average rose 46.57 to 10,392.52 while the S&P 500 index added 3.64 to 1,181.66. The Nasdaq Composite, which had fallen below 1,900, came back to close up 11.43 to 1,930.32. Volume was moderate with 1.06bn trades in the NYSE. Ciena, which joined the long list of companies warning of an earnings shortfall, weighed on technology stocks early in the session. Shares tumbled 30.3 per cent to $19.61. Among other stocks in the sector, ONI Systems trimmed steep losses to end 8 per cent lower at $17.02 and Corning reversed course to close up 0.8 per cent at $15.05. Brocade Communications shed 8 per cent to $27.96 after the data storage network said fourth-quarter profits would fail to meet Wall Street expectations. The stock was also hit by a downgrade from JP Morgan. EMC gained 4.7 per cent at $16.85 after trailing earlier. Dell fell 0.5 per cent at $25.38 ahead of its earnings results due after the close of trading. Hewlett-Packard gained 0.1 per cent to $24.13. The company reported results that topped Wall Street estimates after the close. Intel, the world's biggest chipmaker, gained 1.3 per cent at $30.16 and Microsoft rose 2 per cent at $64.62. Other leading Dow components included McDonalds, up 4 per cent to $29.70 and United Technologies, up 4 per cent to $73.60. Retailers were hit as Gap fell 1 per cent to $23.35 after UBS Warburg downgraded the company ahead of its earnings results due after the close. Ann Taylor rose 0.5 per cent to $35.07 despite reporting second-quarter earnings that failed to meet analysts' estimates. Charles Schwab fell 4 per cent to $12.87 after Salomon Smith Barney cut its 2001 and 2002 earnings estimates on the discount broker. Energy shares plunged as Enron continued its decline, down 8.4 per cent to $36.85, following the resignation of its chief executive earlier this week. Exxon Mobil dropped 0.7 per cent to $41.21. Positive economic data also helped change investor sentiment and revealed signs that the US economy may be emerging from its year-long decline. Figures showed positive trends in housing starts, inflation and jobless claims. Toronto moved lower in early trading as technology leaders met with renewed selling. But the TSE-300 index recovered to 7,569.47 by the close, up 36.75. Nortel Networks hit an intraday low of C$10.02 before closing up 15 cents at C$10.65. JDS Uniphase also ended down, but still above its intraday low of C$12.93. © Copyright Financial Times Ltd. All rights reserved. http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Aug. 17, 2001, 1:17AM Houston Chronicle Snags still slowing electricity pilot Switch may take until October By LAURA GOLDBERG Copyright 2001 Houston Chronicle Some consumers taking part in the state's electricity deregulation pilot program might not start getting power from their new -- and cheaper -- providers until as late as the end of October. It was hoped most would start in August or September. Switching consumers to new power companies has been slow because of computer glitches at the Electric Reliability Council of Texas, known as ERCOT. Computers used for the switching were shut down Tuesday and Wednesday so ERCOT could test recent upgrades and fixes. But they were up and running well Thursday, said Sam Jones, chief operating officer at ERCOT, which is charged with handling a variety of operations needed to make electricity deregulation function. Several electricity providers remain critical of ERCOT's switching capabilities, saying the delays are costing them money and questioning ERCOT's ability to do what it's supposed to do in an accurate and timely way. But Jones said the systems are running much better since the shutdown. "We really think that we're getting on top of the issue," he said. Texas opens its electricity market to competition on Jan. 1. The pilot was planned so ERCOT, energy companies and others could test systems and work out bugs before then. A limited number of consumers are also participating. The pilot was originally scheduled to start June 1 but was delayed three times because ERCOT's systems weren't ready. Instead, it began July 31. Almost 64,000 Houston residents signed up to get power from companies other than Reliant Energy HL&P during the pilot. Statewide, about 103,000 residents signed on. Under the original schedule, they would have been getting cheaper power from their new providers by now. With the July 31 start, ERCOT hoped to process pending switching requests by the end of August. If so, everyone in the pilot should have gotten power from new providers by mid-October at the latest. It was expected most would start in August or September. Once ERCOT processes a switch, it sends a postcard to a consumer seeking verification he or she wants a change. Once received, service from a new provider begins after the end of a consumer's normal meter-reading cycle. The two steps can take as long as 45 days. So far, ERCOT has about 2,500 requests in various stages of being processed. More than 150 consumers have actually begun receiving power from new providers, Jones said. Once ERCOT brought the computers up, it processed 330 switches Thursday. It could ramp up to 1,300 a day next week. Jones said ERCOT should be able to process all the pending switch requests by mid-September. Shell Energy Services and the New Power Co., both of which signed up Houston customers, are among those who have criticized ERCOT. Shell, in a filing Thursday with the state Public Utility Commission, said ERCOT's problems hadn't been resolved and that error rates during the switching process have been increasing. The PUC oversees ERCOT. "Some of our customers still cannot even be identified, much less billed on a timely and accurate basis, or have their power scheduled correctly," Shell wrote. Jones disagreed that error rates are increasing. "What we've been doing is concentrating more on just getting the system fixed ... and that's basically what we've been able to do in the last two days," Jones said. At New Power, Suzanne Bertin, manager of government affairs, doesn't believe all its switching requests will be processed by mid-September. New Power has signed up close to 50,000 residential and small-business customers for the pilot. Barring any more significant delays, Bertin said she believes there should still be enough time to run a proper pilot. "We would have liked several months to test out our billing systems," Bertin said. "At this point we'd be happy if we had a couple cycles. We certainly don't want to run into a situation where the first bill gets issued in December." Based on current knowledge, Thursday a PUC spokesman said, "The market will be ready for retail competition Jan. 1." Socially unconscious funds There's good reason the fund group draws paltry assets CBS MarketWatch.com August 13, 2001 LOS ANGELES (CBS.MW) - For several years, I've been an ardent supporter of socially responsible mutual funds. Until recently, many have been as successful financially as they are socially conscious, even beating the major indexes. Besides, being against something like "social responsibility" sounds evil. The fact is that most fund investors aren't interested in socially responsible funds. Why else is only $12 billion of the mutual fund industry's $6 trillion in total assets invested in them? I discovered why from my sister recently. My sister is a nurse who's worked for and donated lots of time to charities for years -- prison ministries, the elderly, migrant workers. She's a good soul who loves helping people. But she's convinced even the leading socially responsible funds are investing in socially irresponsible companies. Actually, her perspective shouldn't have surprised me. You can't please everybody -- one woman's sin city may be some guy's pleasure trip. If you try to screen out every single company that invests in one of the 12 major "evil" categories, you might have nothing left in fund portfolios, especially in this age of mega-conglomerates. Imagine eliminating every stock that had anything to do with alcohol, tobacco, gambling, weapons and animal testing. Plus eliminating every company with a division or subsidiary somewhere in the world that violates human rights, labor relations, women's rights and the environment. There's not much left. Do fund investors really lack a social conscience? My sister got me thinking. The Social Investment Forum <http://www.socialinvest.org/<; says there was $2 trillion invested in all socially responsible securities as of their most recent Trends Report 1999 <http://www.socialinvest.org/areas/research/trends/1999-Trends.htm<. Yet the roughly 100 socially responsible funds hold less than 1 percent of the $6 trillion in all mutual funds. For perspective, consider there are 45 large mutual funds each with more assets than all the socially conscious funds. In other words, socially responsible investors are putting about 99.5 percent of their socially responsible $2 trillion directly into companies, not the funds - with a mere $12 billion in funds. Do fund investors really lack a social conscience? No, just when it comes to funds. And you can see why they avoid these funds. I saw why by looking at several - from my sister's perspective. Here's a few observations using Morningstar data as of June 2001: Domini Social Equity(DSEFX <http://cbs.marketwatch.com/tools/quotes/detail.asp?view=detail&;symb=DSEFX<) The biggest is a large-cap blend fund with $1.3 billion in assets. Domini created the popular socially responsible Domini Index. The fund's 10-year average is over 14 percent annually, despite a 19.4 percent drop the past 12 months. At 0.96 percent, the expenses are very high for index fund. My sister nixed the fund because it's invested in stocks like Pepsi and Disney, which don't meet her personal "screens." Pax World Balanced(PAXWX <http://cbs.marketwatch.com/tools/quotes/detail.asp?view=detail&;symb=PAXWX<) The granddaddy of the lot was launched in 1971. Now with $1.2 billion in assets, it's averaged 11.4 percent annualized over the past decade and is down only 1.2 percent the past year, thanks to its hybrid balanced strategy. But bad news here -- it invests in greedy energy companies like giant Enron. Out! Dreyfus Premier Third Century(DRTHX <http://cbs.marketwatch.com/tools/quotes/detail.asp?view=detail&;symb=DRTHX<) Another veteran launched in 1972, with $989 million in assets. It lost 27.3 percent in the past 12 months, but has a 12.2 percent annualized return for the past decade. Even if the fund wasn't closed, companies like Wal-Mart aren't acceptable to people who hate these giants for destroying little family retailers. Calvert Social Investment Balanced(CSIFX <http://cbs.marketwatch.com/tools/quotes/detail.asp?view=detail&;symb=CSIFX<) Calvert is a leader among socially responsible fund families. This one manages $667 million and has been around since 1982. Yet its 4.75 percent front end fee hardly seems socially conscious. And the Calvert World Value International Equity fund is worse, with a deferred load of 5 percent, a one percent 12b1 fee and a humongous 3 percent expense ratio. Citizens Core Growth Standard(WAIDX <http://cbs.marketwatch.com/tools/quotes/detail.asp?view=detail&;symb=WAIDX<) Here's another respected fund family in the socially conscious arena, managing $613 million. It's lost 23 percent the last year, but is averaging 14.5 percent the past five years. My sister has a strong bias against the major banks and their credit card companies, so this got axed, too. I could go on, but you get the point. In the final analysis, socially conscious investing is really a matter of personal conscience. Even after the Social Investment Forum screens companies, almost any funds can be excluded for one reason or another, by one person or the other. It's all a matter of personal, ethical and moral beliefs. Period. Invest in socially conscious companies, not funds Moreover, I believe this explains why even the so-called socially conscious investor is ignoring socially conscious funds - apparently in favor of direct investing in the companies. Why else is so little money invested in these funds I don't suggest that Americans are socially unconscious. Funds just don't do the best job of screening. So ultimately it's an individual's screen that counts, and there are 83 million unique investors doing the screening. My advice, if you choose, please do invest with your conscious, make a profit in some excellent companies that fit your own personal guidelines - and then donate a share of your profits to a "good cause" that fits your consciousness.
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